Hulu’s IPO trial balloon

Online Video This morning’s New York Times “scoop” on a possible $2 billion Hulu IPO has the feel of a floater about it. The sourcing — “people briefed on the matter” — suggests a strategic leak, rather than information independently developed by the paper and then confirmed by sources in a position to know something. And as Peter Kafka points out at All Things Digital, the $2 billion valuation figure seems more aspirational than well-documented.

Who would leak such an item? Presumably someone at Hulu (or an investment bank acting as cut-out) hoping to persuade its network parent companies to let it leave the nest by dangling a big valuation number in front of them. Either that or one or more of the parent companies looking to gauge interest in an IPO without committing themselves on the record.

Either way, breaking free of its parent companies — whether by IPO, spin-off of sale — is really Hulu’s only hope for long-term success. As I noted in a post for GigaOm Pro last month (sub. req.) Hulu needs to get into the living room, via connected TV or set-top box, if it hopes to compete with the likes of Netflix and YouTube. But so far, its parent companies have blocked the living room door to protect their lucrative relationships with cable and satellite providers.

All the free content in the world isn’t going to make Hulu competitive if that content is not exclusive and is only available on PCs and mobile devices. It needs to make itself into a service worth paying for by delivering value beyond the content itself.

On digital platforms, services, not content, are king. Little of Netflix’s content is exclusive. It thrives because for $8.99 a month you get all-you-can-eat streaming on virtually any connected device, including those in the living room. Like it or not, that’s the bar Hulu needs to reach.